Buying Interest in the Copper Spot Market was Suppressed by Multiple Factors

SHANGHAI, Aug 1 (SMM) - On August 1, spot premiums of copper cathode in the Shanghai market were quoted at 330-410 yuan/mt over the SHFE 2208 copper contract, and the average premium was 370 yuan/mt, up 20 yuan/mt from the previous trading day. The traded prices of standard-quality copper were 61,450-61,730 yuan/mt, and the high-quality copper was traded at 61,470-61,750 yuan/mt. In the early trading, the SHFE copper contract dropped to 61,000 yuan/mt and then hovered narrowly around 61,150 yuan/mt.

The falling spot premiums from 400 yuan/mt to 330 yuan/mt still could not arouse the traders’ buying interest. The spread between the high-quality and standard-quality copper stabilised at around premiums of 10-20 yuan/mt, and the market still not preferred the former. With the inflow of imported hydro-copper, the quotes kept falling, dragging down the premiums of standard-quality copper to 190-230 yuan/mt, and the downstream generally purchased on rigid demand.

On the first trading day of August, the imported goods did not flow into the domestic market at the weekend as expected, arousing firm prices amid the low inventory. The high premiums and high futures prices suppressed the buying interest, thus the overall quotes fell from high. Meanwhile, the backwardation structure of around 400 yuan/mt of the near-month contracts also restricted the buying. The premiums in the future market will drop further under pressure.